75% of voters supported the remuneration package, despite governance and social concerns surrounding the remuneration of the richest man on the planet…

Billionaire Elon Musk – Photo: Getty/FT.

Tesla shareholders on November 6 officially approved a $1 trillion compensation package for CEO Elon Musk, hoping the generous compensation will motivate Mr. Musk to focus on developing the world’s leading electric car manufacturer.

In a vote at Tesla’s annual shareholder meeting held at its gigafactory in Texas, 75% of the votes cast supported the compensation package, despite governance and social concerns surrounding the pay of the richest man on the planet.

The strong support from shareholders suggests they are concerned about the possibility of Musk resigning if the proposal is rejected. When the results were announced, Mr. Musk appeared on stage to cheers from retail shareholders, dancing to techno music with two humanoid robots “Optimus.” In a speech afterward, Mr. Musk emphasized the importance of artificial intelligence (AI) and robotics in global economic growth, while also urging shareholders to hold onto Tesla stock.

The unprecedented compensation package sets ambitious targets for Mr. Musk, because to “unlock” the stock awards in the package, he must lead Tesla to achieve key capitalization and profit milestones. To receive the full $1 trillion, Mr. Musk would have to increase Tesla’s value sixfold to $8.5 trillion, increase the company’s profits 24-fold to $400 billion, and sell millions of robots and self-driving car subscriptions.

Mr. Musk and Tesla’s board have argued that the compensation package is necessary to ensure his control over Tesla as the company builds powerful AI models and an “army” of humanoid robots.

However , according to the Financial Times, before being approved, this remuneration package faced opposition from many sides.

Proxy advisers Institutional Shareholder Services and Glass Lewis had advised investors to vote against the proposal, criticizing its “shocking” size and lack of “regulatory” elements to ensure Mr. Musk prioritized Tesla over his other ventures. Norway’s sovereign wealth fund, one of Tesla’s 10 largest shareholders, had also stated its opposition to the compensation package before the vote.

Tesla President Robyn Denholm, Chief Financial Officer Vaibhav Taneja and General Counsel Brandon Ehrhart spent last week in New York lobbying top investors, warning of a bleak future for the $1.4 trillion market cap electric carmaker if it fails to keep Mr. Musk as CEO.

Ms Denholm said Tesla’s share price could collapse without Mr Musk leading the company, and that such a large compensation package was the only way to motivate the world’s richest man to continue his extraordinary efforts and achieve the “impossible”.

Mr Musk’s wealth and compensation have been the subject of controversy and litigation for years. He has amassed a $460 billion fortune from a business empire that includes Tesla, SpaceX and xAI.

A Delaware court rejected another $56 billion compensation package Tesla gave Mr. Musk in 2018. Judges said it was excessive and the board favored him too much. Tesla is appealing the decision.

Tesla’s current $1.4 trillion market capitalization is larger than that of all other Western automakers combined.